U.S. retail sales increased more than expected in May as consumers bought motor vehicles and a range of other goods even as they paid more for gasoline, the latest indication of an acceleration in economic growth in the second quarter.
The Commerce Department said on Thursday retail sales jumped 0.8 percent last month, the biggest advance since November 2017. Data for April was revised up to show sales rising 0.4 percent instead of the previously reported 0.2 percent gain.
Economists polled by Reuters had forecast retail sales rising 0.4 percent in May. Retail sales in May increased 5.9 percent from a year ago.
Excluding automobiles, gasoline, building materials and food services, retail sales increased 0.5 percent last month after an upwardly revised 0.6 percent increase in April. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously reported to have risen 0.5 percent in April.
The Federal Reserve raised interest rates on Wednesday for the second time this year. The U.S. central bank forecast two more rate hikes for 2018. The Fed said “economic activity has been rising at a solid rate” and “growth of household spending has picked up.”
The strong retail sales report added to data ranging from the labor market to manufacturing and trade in suggesting the economy was regaining momentum in the second quarter after growth slowed at the start of the year amid a sharp step-down in consumer spending.
Growth estimates for the April-June quarter are as high as a 4.6 percent annualized rate. The economy grew at a 2.2 percent rate in the first quarter.
In May, auto sales rose 0.5 percent after gaining 0.2 percent in April. Receipts at service stations surged 2.0 percent, reflecting higher gasoline prices. Prices at the pump have risen by 15.5 percent this year, according to U.S. Energy Information Administration data. Expensive gasoline, if sustained, could pull spending away from other categories.
Sales at building material stores rebounded 2.4 percent last month after declining 0.8 percent in April. Receipts at clothing stores surged 1.3 percent, the largest gain since March 2017. There were also increases in online retail sales, but receipts at furniture stores fell 2.4 percent, the largest drop since December 2013.
Sales at restaurants and bars jumped 1.3 percent, the biggest gains since January 2017.